Traders on the floor of The New York Stock Exchange on Tuesday, as the Dow Jones industrial average marched to an all-time high. / Spencer Platt, Getty Images

by Adam Shell, USA TODAY

by Adam Shell, USA TODAY

NEW YORK - It's as if the meltdown on Wall Street a few years back never happened.

The Dow is trading at an all-time high. The stock market has stabilized. Stocks are steadily rising.

There's also chatter on Wall Street that the mighty bull might have finally slain the big bad bear that has made life miserable for stock investors for more than a decade.

New highs have a way of transitioning the investor mindset from pessimism to optimism. The Dow Jones industrial average did its part today by completing its historic melt-up from the worst stock market plunge since the Great Depression. The world's best-known and most closely followed stock index broke out and closed at a fresh all-time high of 14,253.77 following its powerful 125.95-point advance.

The Dow's record-setting milestone erases all of the 7,617 points it lost during one of the darkest periods in U.S. financial history, one historians will probably refer to as "The Great Recession" or the "2008 financial crisis," and one that will be long remembered for shaking the faith of stock investors to the core.

"The significance of hitting an all-time high is it is another step towards restoring confidence," says Tim Hayes, chief global investment strategist at Ned Davis Research.

During the course of its 118% rebound, the Dow didn't just climb a "wall of worry," as Wall Street pros like to say. It climbed a mountain of worries, which makes its accomplishment all the more significant.

Add to the list of worries earthquakes and tsunamis. Political gridlock. A debt crisis in Europe. The loss of the USA's triple-A credit rating. Japan's nuclear accident. Hurricanes and superstorms. And a close call to avoid falling off the so-called "fiscal cliff."

The stock market's resiliency in the face of so many grave threats has Wall Street seriously wondering if the long-term market decline that began in 2000 after the the technology-stock bubble burst, and which continued during the Dow's 54% plunge in the 2007-09 bear market, may finally be nearing its end.

A recent client report from Bespoke Investment Group with a headline posing the question, "A New Bull Market?" captures Wall Street's current line of thinking.

Paul Hickey, the report's author and Bespoke co-founder, offered this simple answer: "Where the #$%^ have you been for the last one thousand four hundred and (fifty-two) days," citing the the length of the current bull market, which ranks eighth best of all time.

Investor-friendly signs

If the death of the 13-year-old bear market were to be true it would enable the stock market to shake off, once and for all, the belief of many on Wall Street that big rallies like the 2003-2007 bull run, and the current surge that began four years ago, are little more than short-lived bursts of good performance that will end in pain in what is still a multi-year downtrend, or secular bear market.

In short, a so-called secular bear market is a period ranging from 13 to 16 years in which the stock market either loses money or trades sideways, according to NDR data analyzing the four secular bears since 1906. The current period from 2000 through the end of January 2013 fits the bill, with the Dow posting annualized gains of just 1.3% over more than a decade's time. The infamous period from 1966 to 1982 when the Dow basically traded around the same 1,000 level for 16 years is another example.

In contrast, a secular bull market is far more investor-friendly, especially for buy-and-hold types. In the four secular bull markets since 1900, which lasted roughly 12 years, on average, the Dow has posted annual gains of 15%.

Laszlo Birinyi, founder and president of investment firm Birinyi Associates, bristles at trying to pin a definition on the current bull market.

"We dispute the contention that this is a rally in a secular bear market or that somehow it does not qualify as a bona fide bull market," he stressed in his 2013 outlook. His work suggests that the stock market is in the midst of a protracted bull market that will extend through most of 2013, driven largely by an improving U.S. economy, the lifting of the pall in Europe and the more than $10 trillion sitting on the sidelines in cash.

While Hayes of Ned Davis Research says his firm's work confirms that the stock market is in the process of a long-awaited transition from a long-term bear market into a long-term bull market, he says it's premature to make the call.

"Secular trends can only be identified in hindsight," he says, adding that there is a possibility that the bear market low back in March 2009 may turn out to be the end of the secular bear market. Before he is willing to confirm the start of a new secular bull market, he would like to see the Standard & Poor's 500-stock index join the Dow in the new-high club and then break out decisively to the upside (it is still 1.6% shy). He notes that the market failed to break out for good after making earlier record highs in 2007. He would also like to see more markets around the world hit fresh peaks, as well as see concrete signs that the global economic expansion is sustainable.

"A topside breakout would be viewed ... as confirmation of the bull market that began in March 2009," adds Craig Johnson, a technical market strategist at Piper Jaffray. He sees the broad market hitting 1700 with the next 12 months, which equates to a gain of 10% for the S&P from current levels.

Still, Johnson says there are signs emerging that suggest individual investors are shifting their cash from safe investments such as bonds and cash back into stocks. For example, in the seven weeks ended Feb. 20, net inflows to stock mutual funds totaled $54.2 billion, according to ICI data. Much of the asset shift, he says, is being motivated by investors who are starting to see market roadblocks, such as consumers paying off their debts, sub-par growth, financial flare-ups and other conflicts around the world, starting to recede.

"We are entering a more normal environment for stocks," says Hayes, adding that he still expects a correction soon but views the dip as a buying opportunity that will lead to a strong rally.

A note of skepticism

Jurrien Timmer, a portfolio manager at Fidelity Investments, also has his doubts that the Dow's recent run to new highs is a sure sign that the market has moved into a long-term uptrend. "We may be getting yet another short-term cyclical peak," he says. He notes that most secular bears don't run their course until they have suffered three separate declines of 20% or more before the tide turned. In the current 13-year downtrend there have been only two, although a 19.9% drop in the summer of 2011 may be close enough to do away with this caveat.

Still, he says there is growing evidence that the worst for the stock market may be over. And he advises investors to make sure that they are "not too defensively positioned" in case the bull gains more steam. Investors want to be able to take advantage of any potential upside. And the upside is potentially substantial. His research of secular bulls dating back to the late 1890s shows they last more than 21 years and produced a total annual return of 17.2%.

And fresh highs could be just the thing to get the stock market racing higher again, adds James Stack, editor of InvesTech Research investment newsletter.

"The pop to new highs will result in more bullish headlines, more analysts shifting their position to the bullish camp and most likely investors starting to feel more comfortable about getting into the market," Stack says. "You don't know if it is a new top. A recent Yahoo poll found that 41% are 'still waiting to get back in' to the stock market. That still shows a great deal of skepticism and doubt, which is actually healthy."